The Value Added Tax Act (Chapter 406 of the Laws of Malta) is the principal statute governing VAT in Malta. It implements Council Directive 2006/112/EC (the EU Principal VAT Directive) and imposes VAT on the supply of goods and services in Malta, on the intra-Community acquisition of goods, and on the importation of goods from outside the EU. The standard VAT rate is 18%; a reduced rate of 7% applies to accommodation and certain recreational services; a further reduced rate of 5% applies to certain food items, medical equipment, printed matter, and residential renovation; and a zero rate applies to exports, intra-Community supplies, and certain essential items.

The Act requires all taxable persons with annual turnover above the registration threshold (currently €30,000 for goods; €20,000 for services) to register with the Commissioner for Revenue and to charge, collect, and remit VAT through periodic VAT returns (monthly or quarterly depending on turnover). Input tax credit entitles registered traders to deduct VAT paid on business inputs from VAT charged on outputs; the net difference is remitted or refunded. Exempt supplies (health, education, insurance, financial services, letting of immovable property) do not carry the right to input credit.

The Act grants the Commissioner for Revenue broad powers of audit, assessment, and enforcement, including the power to raise best-of-judgement assessments where records are inadequate. Administrative penalties of up to 100% of the tax due apply to fraudulent evasion; a surcharge of 0.54% per month accrues on late payments. Appeals against assessments lie to the Tax Review Tribunal and thereafter to the Court of Appeal. The consolidated text reflects amendments through the end of 2020.

Value Added Tax Act — Consolidated Text (Chapter 406)